15th Annual Horizontal Directional Drilling Survey

While Bumps In The Road Continue, Overall HDD Industry Presses Ahead
By Robert Carpenter, Editor | June 2013, Vol. 68, No. 6

This California respondent explained that inexperienced contractors have become a major issue. “Everyone looks at what we do, what we charge and they say ‘I'm getting into that, you guys make so much money it is a crime.’ Then they get a rig and find out it is a little tougher than it looks. The first time they need a new stack of drill pipe they say ‘Wow, that is expensive! How am I supposed to afford that with the low prices I am getting paid?’ The low prices are self-inflicted wounds, of course. It seems like this HDD industry should be fully matured after the last 20 years, but I do not think it is yet. The most shocking thing I find is when I ask other contractors what their cost is to run their rigs. You get wildly varying answers.”

Nonetheless, the industry marches forward to generally good market conditions. Demand for more pullback strength and torque to compete more effectively and a variety of applications has contributed to a spike in the mid-sized market. While mini-rigs (defined by having 40,000 pounds or less of pullback force) still account for the largest portion of rigs in use today at 60.6 percent, that number continues to shrink on an annual basis. On the other hand, mid-size rig ownership (between 40,000 and 100,000 pounds of pullback) has climbed to 30.2 percent of the market compared to just 27.2 percent a year ago. More drilling companies are also going big. Large units (greater than 100,000 pounds of pullback force) climbed from 8.1 percent of the market in 2012 to 9.2 percent today.

To further substantiate the growth of the mid and large rig markets, contractor buying plans for 2013 reflect interest in rigs with more “muscle.” Only 40.1 percent of contractors indicated they were going to buy mini rigs in 2013. Of course, they will tend to purchase multiple units or about 50.2 percent of all rig purchases. Roughly 49 percent of contractors said they were going to invest in mid-sized rigs, accounting for 33.8 percent of all rig purchases. About 10.9 percent of contractors intend to add large rigs to their equipment fleets in 2013 which equates to 11 percent of the market. Overall, almost 62 percent of HDD equipment owners plan to purchase at least one new rig in 2013.

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